Skip to main content

Electronic Arts


, the world's largest independent video-game maker, looked supernaturally good in beating earnings and revenue estimates for its third quarter ended in December.

Reporting after the market closed, the Redwood City, Calif., software company said it earned $1.03 a share on $832.9 million in revenue for the quarter, which included the all-important holiday season. Including all costs, the company earned 92 cents a share. Estimates gathered by Thomson Financial/First Call were for the company to earn 89 cents a share on a pro forma basis on revenue of $735 million. Last year the company earned 66 cents a share on a pro forma basis, which excludes certain charges.

Electronic Arts closed slightly off for the day, down 5 cents, or 0.1%, to $56.90. Following its report, after-hours trading saw the stock fall 1.8%. Lehman Brothers' analyst Felicia Kantor said the drop might be the result of disappointment in EA's software sales for the PlayStation2 console. Her firm has no underwriting relationship with EA.

The video-game maker, which has the strongest sports-game lineup in the industry and one of the top games with its


franchise, was likely helped by stronger-than-expected sales of its

Harry Potter

release, based on the best-selling books on the magical moppet. This year the holiday season included sales for brand-new video game platforms introduced by

TheStreet Recommends


(MSFT) - Get Microsoft Corporation Report

and Nintendo, as well as video games from the industry leader, the PlayStation2 by


(SNE) - Get Sony Corp. Report


Electronic Arts is the leading maker of games for the PS2, which has sold an estimated 16 million units since it was introduced in October 2001, according to UBS Warburg estimates. Microsoft's Xbox sold an estimated 1 million consoles, and Nintendo's GameCube, an estimated 2.5 million models since they were introduced in November, according to UBS Warburg. EA is a leading seller for all three consoles, having seven of the top 20 PS2 software titles, six of the top-20 Xbox titles and five of the top 20 GameCube titles in a recent week, according to a note by UBS Warburg's Michael Wallace. His firm has done no banking for EA.

U.S. Bancorp Piper Jaffray analyst Tony Gikas predicted in a Jan. 17 research note that EA's upside was likely boosted by "phenomenal" sales of the

Harry Potter

game. Repeating his strong buy rating of EA, Gikas said shipments of the game may have exceeded 5 million, instead of the 3 million projected for the quarter. Gikas' firm has no banking relationship with EA.